Moody’s Investors Service has upgraded YES Bank’s rating to B2 from B3 and altered the outlook from stable to positive.
The upgrade reflects Moody’s anticipation of a further improvement in the bank’s credit profile, owing to the cleanup of historical stressed assets as well as increases in capital and profitability, according to the agency.
Because YES Bank’s funding and liquidity have significantly improved in the last year, depositor and credit confidence in the bank has increased, according to Moody’s.
The rating action also reflects the fact that, despite considerable economic hardships since the outbreak of the pandemic, YES Bank’s asset quality has only slightly worsened while its capital has remained stable, according to Moody’s.
Yes Bank’s government support assumption has also been adjusted from high to moderate, resulting in a one-notch upgrade to the B2 issuer rating from the b3 BCA. The support assumption is consistent with what is expected for other Indian private sector banks.
In the September quarter, Yes Bank posted a net profit of 225 crore, up from 129 crore the previous quarter.
According to Moody’s, YES Bank’s asset quality is a potential risk going forward, as stressed assets continue to threaten the bank’s profitability and capital.
In terms of asset quality, the gross nonperforming asset (NPA) ratio declined to 15% in September from 15.6 percent in June, while the net NPA ratio fell to 5.5 percent from 5.8 percent the previous quarter.
